CHEMICALS THEME is a falling knife, continues to bleed every investor trying to catch it

Chemicals is a falling knife that can bleed you if you catch it today. It increased by +0.71% to close at 1427.57. During the last week it delivered -3.07% and saw a maximum drawdown of -3.75% before bouncing back.

Trend

Monthly Performance

Alpha (outperformance)

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Volatility

Return distribution

~CHEMICALS has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 25 Jan, 2016 to 5 Jan, 2018. Over the last 2 years 11 months and 14 days, ~CHEMICALS outperformed the SP500 index on 53% days.

During the last three months ~CHEMICALS was mostly loss making and delivered on average -0.32% per day. It's best return during this period (of +3.85%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -4.47%) was on Tuesday, 9 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 21 Sep, 2018 and ended on 28 Sep, 2018. This bearish trend lost -3.55% of investor capital.

The last 12 months saw ~CHEMICALS's investors making profits in 6 months and incurring losses in 6 months. ~CHEMICALS was less consistent in delivering monthly returs than SP500 index. ~CHEMICALS was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -10.65% compared to -7.75% returned by SP500 index in Dec 2018. ~CHEMICALS had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both ~CHEMICALS and SP500 index significantly outperform during months when quarterly/annual results are announced.

Security depends not so much upon how much you have, as upon how much you can do without. -- Joseph Wood Krutch

~CHEMICALS is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in ~CHEMICALS's volatility from 3 Oct, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that ~CHEMICALS has significant positive skewness in it's return distribution. This indicates that investors can expect ~CHEMICALS to recover from drawdowns quickly. Which makes ~CHEMICALS a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

~CHEMICALS has more chance of extreme outcomes than the SP500 index. Therefore, ~CHEMICALS must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than ~CHEMICALS.

Based on your interest in ~CHEMICALS you may find it interesting to know that FDX, ~INTERNET and ~GARPLOWPEG have all performed similar to ~CHEMICALS and qualify as alternative investment candidates that must be evaluated for diversification.

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All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.

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